Blockchain & The Law Roundup: 29 November 2017

Post Thanksgiving we’ve got a few articles for you about blockchain and the development of the market and law. The New York Assembly has just received legislation designed to deal with certain aspects of crypto law. Canadian legal information blog. SLAW, discusses what may happen with the law and the blockchain in Ontario after the bitcoin crash and The Lawyer’s Daily argues that, “Smart contracts merely an evolution, not a revolution”

Three of four crypto-related bills submitted to the New York State Assembly propose taskforces that would investigate various applications of blockchain technology. The fourth seeks to establish the legal validity of executable distributed code contracts and blockchain-based digital signatures.

On November 27, New York Assemblyman Clyde Vanel (D) introduced four bills relating to blockchain technology.

A08780 would define signatures, records, and contracts“secured through blockchain technology” as electronic forms of these entities. In effect, the bill seeks the recognition of such blockchain-backed entities’ legitimacy, as conventional electronic signatures, records, and contracts are already considered legal instruments. It also states that “smart contracts may exist in commerce,” such that “a contractrelating to a transactionmay not be denied legal effect, validity or enforceability solely because that contract contains a smart contract term.”

A08783 proposes the creation of a digital currency taskforce, which would have until the first day of 2019 to compose and submit a report to the state’s governor and legislature detailing the “potential effects of the widespread implementation of digital currencies on financial markets.” The taskforce’s staff would be appointed by the governor; the temporary Senate president; the superintendent of the Department of Financial Services; and the speaker, majority leader, and minority leader of the Assembly. The body would “collaborate with state and city of New York agencies including, but not limited to, the department of taxation and finance and the department of finance of the city of New York.”

A08792 would direct the New York State Board of Elections, with the help of the Office of Information Technology Services, to “study and evaluate the use of blockchain technology to protect voter records and election results,” eventually presenting a report to the state’s governor and legislature. In the process of preparing the document, the board would be obliged to consult with experts in the fields of blockchain technology, voter fraud, cybersecurity, voter records, and election results.

The last of the blockchain bills was A08793. If passed, it will affect the formation of a taskforce charged with delivering a report on the “feasibility, economic impacts and effectiveness of the implementation of blockchain technology in state record keeping, information storage, and service delivery” to the governor, Assembly speaker, and temporary Senate president by the first day of 2019. Its findings should also include “an analysis of different types of blockchain technology, and the feasibility of implementing each type.” This group’s members would be appointed by the same actors charged with selecting the staff of the research unit called for in A08783, as well as by the Chief Information Officer of the Office of Information Technology Services.

Extract: While blockchain technology and smart contracts seem to be on the cutting edge of the legal world, threatening to disrupt everything, in many ways they’re nothing more than high-tech extensions of concepts and practices that lawyers deal with every day.

Joe Guagliardo, a Philadelphia-based partner at Pepper Hamilton LLP, leader of its technology group and chair of its blockchain practice, and Josh Stark, a lawyer who is also co-founder of L4 Ventures, a Toronto-based company that offers financial support and mentorship to blockchain startups, spoke to lawyers attending Osgoode Hall’s Blockchains, Smart Contracts and the Law seminar, and discussed the many ways in which blockchain technology will extend but not really replace existing legal procedures and entities.

Guagliardo began by reminding the audience that at its core, blockchain is a pretty simple technology that simply stores factual information.

“If you look at fundamentally what blockchain technology is, it’s really a read-only database. So if you look at that from the perspective of it as read-only, the transactions written to this read-only database are verified by some consensus, whether that be public consensus or some semi-private consensus. At the end of the day, we have facts to the extent that they are real when they are written to the database that are trusted and reliable,” he said.

To say there’s a lot in play in today’s financial world would be an understatement. This is a sector full to the brim of technological disruption. Blockchain, bitcoin, AI — all are set to revolutionise banking as we know it. Mobile banking, mobile trading on commodities exchanges, peer-to-peer lending, the disaggregation of global banks — all are either with us, in one way or another, or seemingly just another app away.

Welcome to the brave new world of fintech, which, for many, describes the way in which new technology competes with time-honoured financial systems in the delivery of financial services. But wait: Peter Chapman, a senior associate with Clifford Chance and widely acknowledged as one of the UK’s leading fintech lawyers, says it’s not always a case of competition, of a clash between old and new.

Title: Hardening law, blockchain and managing multi-faceted international legal risk – key themes at this year’s UN Forum on Business and Human Rights

Extract: Given the shift towards responsibility throughout the value chain, it is more important than ever for a business to understand its supply chain and identify human rights risks and impacts within it. Projects in Bangladesh and the Philippines have shown that blockchain can be a neutral carrier of supply chain data facilitating effective due diligence and acting as an early warning system for adverse human rights impacts.

Title: Ethereum Classic: The Evolution of this Cryptocurrency through the Ages

Ethereum Classic (ETC) runs smart contracts on a decentralized trading platform. This means that Ethereum Classic applications have zero downtime, no third-party interception, no fraud, government censorship or other infringements on activity. This decentralized platform is not subject to any tampering of transactional activity. Transaction finality is a key component of the Ethereum Classic platform. All agreements with this blockchain technology are determined by code. This guarantees network neutrality, with no opt-outs and no reversals of exchanges.

The decentralized nature of Ethereum Classic is a core component of its operation. For starters, Ethereum Classic avoids many of the problems inherent in centralized control – nepotism, corruption, and malfeasance. The creators of Ethereum Classic believe strongly in the abandonment of centralized control, and the adoption of a platform predicated on mutual reputation and transparency. Ethereum Classic began in July 2015. At this time, the world’s first smart contract platform using blockchain-based turing technology was created by Vitalik Buterin and The Ethereum Foundation.

Extract: The next generation of blockhain developers, like those working on the Ethereum platform, are less interested in the ideology of anonymous transactions than the practicality of efficient business applications. Corporate adopters like the Enterprise Ethereum Alliance have already noted the pace of migration from anonymous public blockchain networks to a combination of public and permissioned private networks